How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE section..

[mangodance]

How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE section..

I thought we were on track until I lost my job and had some emergencies while I was out of work for 11 months. Coincidently, I also wiped out most of our emergency acct looking for work.

So...the Q is related to a sister topic on the FIRE section entitle "How Did You RE?" ..


I'm cobbling together our accounting from past moves, but I anticipate a state pension around $25-30,000 starting in 7 years, 5 months (has COLA increases until politicians screw those up). Not tremendous, but we're counting it as our "fixed income" portion of the mix. Additionally, it gives us a certain amount of insurance benefit. I wish we'd gone into rentals years ago, but don't wanna buy on the bubble. My wife works, and I found a job a little under a year ago...making 25% less, but it keeps me in the system accruing pension time.
Besides, us lowly scientists aren't exactly on the engineering scale, and in the current climate, given my recent situation, ya take what's available. But the months counting towards my pension aree very important right now.
We're still digging out of a few holes, so basically, we're only doing up to the match at my wife's job, and I'm saving to pay for some pension time in DEC. Once that goes away, We'll be looking for other stuff to jump to in Dec. Roths for both will start back. I'm hoping to continue to pare and be looking at something beyond that.

I'm not convinced just yet that I'll fully retire in 7 years, 5 months, but it's a safe bet I'll retire from my state job. We don't own a house or property. Our quest for rural property died with my last job, but we hope to resurrect it soon. So...just being nosy, but what are y'all doing? I'm especially interested in what some of the folks who don't make a lot are doing.

Ahhh...if I only knew at 18, what I know now...

 

[kat]

Re: How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE secti

Hi Bigfoot. I should begin by saying I don't really know where I stand: How DO you plan to RE, or How DID you RE? I fall into the camp that didn't plan it, didn't do any constructive worrying about it, didn't contemplate it. I awoke one day, as best as I can tell, a little while ago and thought maybe I could.... and maybe I will since it seems I can. And maybe I'll be wrong about that, and I can always go back and work.

But I think I can answer your Q from the perspective of how DO I plan to, because the answer in my case is simply needing very little that I don't already have. I have a "paid up" home in a community I can stay in for the long haul, and I put aside a large stash for traveling money, and a stash for maintenance. It made my basic budget so VERY basic, and easy to fund. I did that deliberately, not wanting to make large withdrawals from my main savings for a long time. I'm 43 and my grandfather made it to just shy of 102. I won't have a pension.

I made stepped up withdrawal calculations using FireCalc, and it worked, so maybe I'll retire early or maybe I'll just take time off. I can't really say it even matters. (I'm self-employed and a pretty good boss. 8) )

85% of my assets are in taxable accounts, and for now I set it up so distributions from Wellesley cover my basic budget. If I want or need more, I'll take it from money I have in I-bonds and/or the Total Stock Market. I plan to re-visit it when I'm 60 and access my IRAs.

I wish you well with your planning. Remember to enjoy the time along the way, too.

kate

 

[Calgary_Girl]

Re: How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE section..

We plan to RE by 1) living below our means; 2) Maximizing our retirement plans as well as saving outside of this.

Currently, we save 20% of our gross incomes every year in our retirement plans and save up to an additional 20% of our net income in a combination of mutual funds and stocks outside of retirement. I've been reading a book written by the supposedly youngest retiree in Canada (retired at 35). His strategy to get out of the rat race was to purchase high dividend paying stocks since they are given preferential tax treatment. DH and I have started doing this through income trusts which pay a monthly cash distribution. So far, it's worked out pretty well. We currently receive enough every month in distributions to pay all of the household "utilities".

 

[maddythebeagle]

Re: How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE section..

bigfoot: What state do you work for? 25,000-30000 pension sounds good esp. since a lot of the states have seperate funds for thier pension plans so you are more likely to act. get it. Are you in a state that exempts you from ss contributions? and do you get any health care benies when you retire?

Have you participated in your 457k (deferred comp)? There is a catch-up provision for that, of course I always wonder if that it the best deal since compounding doesnt work as well over a few years vs. over 20-30 years. But I suppose if you take a small percentage out and allow some compouding during your retirement, I guess it makes sense.

 

[Helen]

Re: How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE section..

Hi Bigfoot,

My partner and I are on track to retire in a little less than 8 years at ages 55 & 56. We will both have pensions, but they will be reduced by 30% for ER.

We just paid or mortgage off on Friday and will now snowball the mortgage payment into retirement savings.

We max our 403b/401ks and contribute to our Roth's every year. We sock the rest away in after tax accounts.

Right now the plan is to live off our after tax savings for the first six years of retirement. This will keep us from tapping into our IRAs until after we are 60.

So, basically we are doing what the others have mentioned, living below our means and saving 40% of our gross.

We got a late start in savings (we were 35) and want out at 55 so we have to really sock it away to reach our goal.

Best of luck to you !

-helen

 

[yakers]

Re: How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE secti

My "plan" is simple enough. Primary reliance is on a Federal Govt pension, I become retirement eligible later this year but expect to work for a few years more depending on a number of things including relations with new manager (love my current manager who is retiring), availability of a buy out (some coworkers have been offered $25K extra to depart but my position is not "excess") and my son who is still in high school and I cannot determine what college support will be necessary.

Other elements: my wife is a teacher and this is her last school year. She will be done in June 06. I think its a good idea to get her settled first as her identity is more tied up in teaching than mine is with my job. She will have a modest but useful pension.
Then we have a paid off house. Very modest place but it is in a nice location in Southern California and I could not buy one like it now.
Then we have our savings, small amount of DRIP stocks and our IRA type accounts.
Retirement medical coverage available through both wife's & my employers.
We have pretty much lived below our means and the only thing that would change is we would like to travel-a lot. But we expect to volunteer a lot so we may live cheaply that way. And if all fails we can work a bit. Lots of offerings but for less than I would make staying on my job.
Biggest unknown is my son's schooling costs but I expect this will become clear in the next year or two and it could work out nicely if there are enough scholarships and financial aid available.

 

[mangodance]

Re: How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE secti

What state do you work for? 25,000-30000 pension sounds good esp. since a lot of the states have seperate funds for thier pension plans so you are more likely to act. get it. Are you in a state that exempts you from ss contributions? and do you get any health care benies when you retire?

Kentucky. The pension is based on a calculation and your avg over your highest 5 earning years among othger factors. I'm basically estimating seven years down the road. I'm not exempt from SS and have enough units to qualify already. I am wholly ignorant of the SS side though. I never expected it to be there for me since every president/congress seems intent on pillaging it for pork projects and the general budget...I.O.U.s my %$$!!!

I am lucky in that I qualify for the old healthcare benefit...you get 25% of your benefit each 5-year period, so at 20 years, you qulaify for 100% of the state's copay...whatever that ends up being (hey! it's SOMETHING!). New govt workers here only get a benefit at $10 copay each month for each year you work for the state.

Have you participated in your 457k (deferred comp)? There is a catch-up provision for that, of course I always wonder if that it the best deal since compounding doesnt work as well over a few years vs. over 20-30 years. But I suppose if you take a small percentage out and allow some compouding during your retirement, I guess it makes sense.

No, in my former position, they went through ICMA which, IMHO, had STEEP fees. As I had been putting most towards a purchase of 5 years of "air-time" in the pension, we didn't really have a surplus outside of what trickled into Roths.

The bennie for a 457 is that it can be taken before the 59.5 age...so early retirement is aided.

After I pay for my time in December. I'll be making some major shifts toward alternatives since I will have paid for all time possible.

We're looking at my pension as the "fixed-income" portion or our retirement.

I know we get a SS mailing each year, but I have no idea what to realistically expect, nor what reductions take place given other retirement income, so I don't factor that into our plans.

 

[tozz]

Re: How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE section..

Hey $25K-$30K plus social security plus healthcare sounds like a great deal to me.  Congrats!

Anyhow, I guess for the next three months I'm still an "young dreamer."  I'll be leaving in September at 47 with a (Early Out) Federal CSRS pension.

For those in their late 30's or 40's in retirement panic mode, I wouldn't dismiss ending your career in civil service.  As long as you have some sort of nut saved, it could be a very viable strategy.

tozz

 

[Patrick]

Re: How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE section..

So...just being nosy, but what are y'all doing? 

Bigfoot, here's how I plan(ned) to ER: I put my raises into the 457 plan until I was maxed out (I didn't feel the pain since I hadn't been spending the $$).  I used the 457 catch-up provision once I was eligible.  I bought a house and later sold it, excluding the gain from the sale ($250K max for a single person, $500K for a married couple, has to be your residence, can do this every 2 years) for tax purposes and purchased a new house, which has since gone up in value (you gotta live somewhere).  Lived Below My Means - yes, I bought a sports car, but got a great deal on a used one and still have it 14 years later (cheaper to pay for repairs than buy new: and insurance and licensing fees are less and I don't have to pay sales tax on a new car).  Put as much as I could into IRAs and Roths.  Promoted up in my employment as quickly as possible to increase my salary, and thereby my pension.  Bought additional time in my pension system.  Rolled my credit card balances to lower-interest rate cards and paid the highest-rate card off first, repeated until all the balances were zero.  Cancelled all cards that charged a monthly fee (i.e. American Express).  Paid off all installment debt so that I'm on a cash basis.

Good luck, I hope it works out for you,

Patrick

 

[Martha]

Re: How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE secti

Well . . . I didn't plan to retire. If I had planned, I might be already retired. About two years ago it dawned on me that I could probably soon join my DH in early retirement. I had tired of my job, especially the managment responsibilies. As a result, we began in some ways to prepare. Sold the cabin. Did not build a new home (though we still think about it on occasion). Talked more about a retirement portfolio rather than an acquisition mode portfolio. Went part time at work.

 

[maddythebeagle]

Re: How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE section..

"For those in their late 30's or 40's in retirement panic mode, I wouldn't dismiss ending your career in civil service. As long as you have some sort of nut saved, it could be a very viable strategy."


- my plan is to have a few nuts stored away.

 

[JDARNELL]

Re: How do YOU plan to ER? -sister topic to "How Did You RE?" on the FIRE section..

Great thread.  Many different views and ideas.  There is more than one way to skin this cat.

My plan is to reduce the amount of time spent working from fulltime once I leave the AF, to part-time, to maybe no time.  So a gradual phasing over about a 3-5 yr period.  This is not really a financial issue but rather an emotional issue for me.  I am really concerned about the mind set change once I leave full-time work.  Looking forward to it but still a concern.   I figure that it will be an easier transition than quiting cold turkey. 

Don't know what CINC house will do when I start my transition.  She does some consulting work and sells real estate now around her schedule.  I think as long as she is having a good time she will maintain status quo.  Not going to get into helping her make this decision.

So to get ready we are aggressively working on reducing cash outlay requirements (house will be paid off and one rental property should be paid off prior to leaving AF), developing a withdrawal strategy from portfolio value including a short term cash buffer with an income smoothing method so no big system shocks,  LBYMs, growing our online retail business, and overseeing our two rental properties.   We max out TSP, Roth IRAs, and wife's self employeed retirement plan.

Transition period and beyond Income Sources:
Military Retirement
SWR from portfolio (shooting for 2.5%)
Rental Income
Part-time employment
Business Revenue

Uncle Sam's P-nut butter money will cover the basics for our family of 4 and the other things will cover the nice to haves and wants.  I actually believe we will have more disposable income then than now.

JDW